By sharing my mindset in the early stages of my day trading journey, I’m hoping it can encourage you to focus on yours.
After just a little research in the day trading profession, it’s clear that mindset is a huge component. There are many trading psychology books out there for a reason.
Here’s why I think mindset matters so much:
There are several ways to make money in the market, and many successful traders often contradict each other regarding this, but they’re pretty much on the same page when it comes to one thing: Learn how to minimize losses.
You need to build the proper mindset for becoming a successful trader. You need the discipline to study and become successful on a paper account, then you need the right mindset to limit your losses.
So as you embark on this journey, it’s wise to check in and see where your mindset is at.
Why Do People Fail?
There aren’t a few ways to be successful in the market, there are many! But there does seem to be a few common reasons why people lose their money.
People seem to fail with trading because:
- They want to get rich quick
- Don’t have a plan (don’t treat it like a business)
- Get emotional during a trade
- Overtrading
- Can’t manage losses
All these things are mental.
It seems like it isn’t a bad strategy that causes beginners to fail necessarily, it’s bad execution from a weak mindset.
My Mindset Based on Past Results and Proper Expectations
At the time of writing this, I’m currently not a successful trader. However I have mastered the first two reasons mentioned above as to why people fail trading:
I have a plan I’m following. I’m treating this like a real business. I have a realistic timeline and realistic expectations.
This comes from my past experiences building an online business. Becoming successful in anything requires a plan, dedication, hard work and consistency. I’ve seen so many beginners starting their own online businesses and expecting quick results and easy money. Instant gratification is your enemy.
The Process of Wealth Creation
I learned this process from one of Alex Hormozi’s videos.
Wealth creation is not a linear journey but a process with several stages. Let’s replace “wealth creation” with “becoming a successful day trader”.
Becoming a successful day trader is not a linear journey. It’s a process with several stages.
- Uninformed Optimism: The initial excitement about an opportunity.
- Informed Pessimism: Realizing the challenges involved.
- The Valley of Despair: Facing the toughest challenges, many give up.
- Informed Optimism: Gaining a deeper understanding and persistence.
- Achievement: Reaching success through perseverance.
What Are Your Weaknesses?
It’s important to be honest with yourself and identify your weaknesses. With enough focus you can turn these into your strengths.
So I have 2 weaknesses that come to mind:
My Schedule
At the time of writing this, I’m a stay at home dad with a wild 18 month old little guy. It’s the arrangement that works best for our family right now.
But this means I have maybe a 1-2 hour break when he’s napping, and the evenings when I’m exhausted from daddy daycare duties. So realistically, I’m doing a lot of work on this project on the weekends.
This schedule will change soon, but I need to realize that I don’t have 12 hour work days like I used to have when I was building my affiliate marketing businesses.
So I can’t waste any time and I need to have proper expectations.
Gambling…
I have never been super careful with money, which is not a great start for day trading.
I’m fortunate I currently don’t need the money from day trading, however I understand that to be successful in the markets, I need to limit losses and track all my trades.
What’s Your Identity?
Do you identify as a trader?
I think this is a key component for success.
Here’s what I mean:
In the past when I wanted to accomplish something, I made it my identity. It’s not easy, but it works.
I wanted to be way healthier than I was, so I made it my identity to be a healthy person.
- Does a healthy person eat unhealthy food? No.
- Does a healthy person exercise everyday? Yes.
I eat a clean diet and exercise everyday because that’s who I am. It’s my identity. When I’m presented with junk food or the opportunity to miss a workout, I understand that is not me. Why would I do that? That’s not who I am.
Obviously this takes time and a lot of work, but it has helped me stick to my health routine because I make it part of my identity.
This is how I was successful in affiliate marketing.
I became an affiliate marketer. That was my identity. I did everything successful affiliate marketers do.
Now I’m starting to identify as a trader. I will be doing all the things that successful traders do.